Forcing Investment May Hurt, Not Help

In response to California Insurance Commissioner Harry Low's thinly veiled threat to insurance companies regarding investment in low-income communities, I have one thing to say: Be careful what you wish for--it may come true ["Insurers Pressured to Invest in Poor Areas," Sept. 3].

The California Organized Investment Network (COIN) was formed as an alternative to legislation as a way to encourage insurance companies to invest in the communities where they do business. By investing, they are exercising their option to give something back. However, it is quite different to force private companies to invest their money in a government-designated area, and Commissioner Low's letter to the insurance companies has crossed that line.

Commissioner Low came within an inch of mandating that the insurance companies set investment "goals." If he does not see a significantly higher level of industry support, said Commissioner Low, he will not continue to "credibly support the current voluntary approach." Although Commissioner Low stopped short of threatening to carry legislation mandating investment, it is clear to those reading between the lines that the insurance companies better invest--or face the consequences.

The insurance industry is heavily regulated because we rely on these companies to provide insurance to consumers when they are the most vulnerable and in the greatest need of help. Accordingly, we count on our insurance companies to make wise investments with their money so that consumers are adequately covered in case of an accident or disaster. If companies choose to invest in low-income communities because it is mutually beneficial, they should be applauded.

However, Commissioner Low's idea to force investment may hurt those he is seeking to assist. This type of government-mandated social engineering will force insurance companies to make up the difference in their costs and expenses elsewhere and increased premiums are certain to follow. If that happens, all consumers, including those who can least afford it, will be hurt in the process.